Ingredion CEO: ‘Some manufacturers are outsourcing NPD to their suppliers’

Gordon: 'Bringing in National Starch was transformational for our business'

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Ingredion, National Starch

With R&D departments at some food manufacturers pared down to the bone as bosses slash overheads to control costs, open innovation has moved from a hot topic on the conference circuit to a practical necessity, says Ingredion CEO Ilene Gordon.

“We have got to the stage where some customers are outsourcing new product development to their suppliers.”

Collaboration means sharing more information, earlier

Now this doesn’t mean Ingredion’s customers have suffered from a collective brain drain, stresses Gordon, who took the helm at Corn Products International (CPI) in 2009 and spearheaded its $1.3bn acquisition of National Starch a year later.

It simply means they now recognize they can get more innovative products to market more quickly if they work more closely with trusted suppliers, adds Gordon, who also drove moves to rebrand CPI as ‘Ingredion’.

As for the new tagline (Developing ideas. Delivering solutions), is it clichéd? Maybe, but it’s bang on the money nonetheless, notes Gordon, who was speaking to FoodNavigator-USA at the IFT show in Las Vegas.

“Food manufacturers are realizing that they need to share more information earlier and they need suppliers that are committed, that will come to them with innovation and offer solutions to their problems.

“This applies to short-term projects such as line extensions, cost optimization or nutritional improvement work, or helping them develop completely new products that might not get to market for five years.”

We want customers to see us as the go-to company, a partner

While National Starch had a reputation for being highly innovative, CPI needed to up its game, recalls Gordon, a high-flying MIT graduate currently occupying 42nd place in Fortune's ranking of America's leading businesswomen.

“Looking back at the old Corn Products, we needed to be more innovative. Bringing in National Starch was transformational for our business. It had a very strong global focus and R&D capability.”

The Ingredion branding - unveiled to the market for the first time at the IFT show - has practical as well as symbolic significance, she says, highlighting the fact that it sells a broad portfolio of food ingredients derived from a range of raw materials from tapioca and potatoes to stevia, not just high fructose corn syrup (HFCS).

“We are not an agrifood company, we are a $6bn+ ingredients company at 390 in the Fortune 500”, stresses Gordon.

“We don’t operate a commodities trading business. We don’t have a logistics business. And we don’t take physical ownership of raw materials beyond what we need to properly run our operations.

“We want customers to see us as the go-to company, a partner. The Ingredion name sends out a message to all of our stakeholders.”

Cost optimization

But while its portfolio now contains a broad range of ingredients, including proprietary products such as resistant starch Hi-Maize, its key strength is in its ability to offer customers a complete package from consumer research and formulations expertise to labeling advice, she says.

The concepts on show at IFT make this clear, she says, from a hot and spicy salad dressing made with instant starches to reduce vegetable oil costs to all-natural, clean label reduced beverages using Ingredion’s Reb A stevia and Q-Naturale emulsifiers.

“We’ll work with customers at our Bridgwater facility and formulate on the spot yogurt texture with the right sweeteners and texturants to meet their needs and their price point.”

She also notes that several customers that made high-profile switches from much-maligned sweetener HFCS to sugar a couple of years back have quietly switched back to HFCS in recent months.

Mature markets still present opportunities

So where are the biggest organic growth opportunities?

While a lot of attention has been focused on emerging markets as many companies have seen volumes going backwards in the US and Europe, Ingredion had a strong first quarter in its domestic market, says Gordon.

“Our volumes grew 4% in North America [which includes Mexico]. Now I’m not saying we can necessarily deliver that kind of volume growth long term, but there are still opportunities in fast-growing niches in mature markets, while in emerging markets the growth is coming from rising GDP and the growth of the middle class.

“The important thing is that major food manufacturers want to work with partners on a global basis.”

Bolt-on acquisitions

On the acquisition front, are other deals on the horizon now that the acquisition of National Starch is almost complete?

Yes, says Gordon, who is eyeing up “bolt-on acquisitions” with a particular focus on China and other fast-growing markets.

But its focus will remain on sweeteners, starches and texturizers, she predicts.

“Put it this way, we’re not going to go out and buy an omega-3 company.”

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With R&D departments at some food manufacturers pared down to the bone as bosses slash overheads to control costs, open innovation has moved from a hot topic on the conference circuit to a practical necessity, says Ingredion CEO Ilene Gordon.

1 comment(Comments are now closed)

FYI

Not a particularly insightful statement or comment on innovation- Ingredion is late to the party- there have been ingredient suppliers providing innovation & innovation guidance to their customer's for years.

Report abuse

Posted by Armstrong15 July 2012 | 15h392012-07-15T15:39:57Z

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